Cuero Bets on Fracking

A tanker truck rumbles through Cuero, at the heart of a shale drilling boom. photo by Sandy Carson

In 2008, Petrohawk Energy sank an oil well on Charlotte Krause’s land in the green fields north of Cuero. Drillers bored into the shale layer 8,000 feet below the surface, blasted it with explosives, and smashed it with millions of gallons of hydraulically pressured, chemical-laden water. Up came a frothy mix of water, oil and gas. The drilling process, known as fracking, filled Petrohawk’s tanks with millions of dollars in oil and natural gas.

The moment lacked the drama of Spindletop. No geyser burst from the ground, shooting into the sky high above the fields of DeWitt County. The oil was loaded onto tanker trucks bound for a refinery in Corpus Christi.

But for the town, and for Krause, the well was every bit as significant as Spindletop. After that, everything changed.

The well on Krause’s property was the first successful one in the Eagle Ford Shale, a layer of underground rock stretching in a rough crescent from Victoria to Del Rio, on the Mexican border. Suspended in the shale are countless tiny droplets of oil and natural gas. Until a few years ago, this gas and oil was considered commercially useless. Then came hydraulic fracturing, or fracking, which blasts the shale apart, releasing the trapped oil and gas. In the Marcellus Shale of Pennsylvania and southern New York and the Barnett Shale of North Texas, fracking opened vast oil and gas reserves to development.

The Eagle Ford Shale is one of the hottest areas in shale drilling, and Cuero is currently the heart of the region’s drilling boom. The rapid change caught the town’s 6,800 residents by surprise. In a few years, Cuero has gone from quiet ranching town to oil boomtown. Tanker trucks rumble through the streets. Roughnecks, dusty in their coveralls, are everywhere, sitting at restaurant tables, walking out of the Shell station with cases of beer.

Restaurants, hotels and retailers are flush with cash. Every hotel and RV park in town is booked—some for two years out. Local entrepreneurs can’t keep up with demand for lodging. H-E-B and Walmart are already planning supercenters.

Petrohawk, Geosouthern and other energy companies specializing in shale gas production have opened offices on the town’s main drag. Mineral lease money has turned some local ranchers into millionaires.

Some citizens see the oil and gas as a ticket to a new tomorrow, a way to turn Cuero into the town they always dreamed it could be. Others fear that the oil boom will eventually go bust, taking everything that once made the town a special place to live down with it. Like the energy companies, which are betting on the shale to produce millions in oil and gas, Cuero is gambling its future on fracking.

I drove into Cuero on a warm night in June, speeding down U.S. Highway 183 through the towns that birthed Texas’ independence from Mexico. These green rolling hills were once full of cattle. Now they’re full of wells. All around me, plumes of flame shot into the night, flares burning off excess gas.

The town was still, but the streets were packed with drilling rigs and fuel trucks. Though it was 10 p.m., I waited five minutes at one of the town’s few traffic lights behind a row of red Halliburton fracking trucks.

Local residents talk about getting tied up in traffic for the first time in the town’s history.

“Used to be, you could drive from one side of town to the other in two minutes at rush hour,” said Krause, the woman whose family sold the mineral rights to Cuero’s first well. “Used to be, you could always get a table at your favorite restaurant. That’s not true anymore.”

Not only do Cuero residents know their neighbors, they often know their neighbors’ grandparents. Or great-grandparents. But that has changed too.

“Used to be it would take you an hour to shop at H-E-B, because you knew everyone in the store,” Krause says. “And you knew their families. Now that’s not true. The H-E-B is full of people, but they’re strangers.”

To some in Cuero, the drilling boom presents a unique opportunity for the town.

“We’ve been given a real gift here,” says Sara Post Meyer, a former schoolteacher who now serves as mayor. “The money gives us a chance to do some real good.”

In 2008, she says, the town brought in about $1.2 million in annual sales and property taxes. This year, tax revenues exceeded $1.2 million by August.

Mayor Meyer says the city plans to spend that money replacing roads and sewer lines. She hopes the money will help Cuero become a rural recreation mecca like Kerrville or Fredericksburg or Wimberley.

David Kleinecke, the vice president of Cuero National Bank, shares the mayor’s vision. The bank building is so new it still smells like plaster and sheetrock.

Kleinecke has staked his reputation on the idea that Cuero will realize permanent benefits from the drilling boom. He says he quit his job managing Prosperity Bank after he realized his bosses didn’t understand banking in small towns. Business is different when you’ve known your customers all your life.

Kleinecke felt there was unprecedented opportunity in Cuero that Prosperity was missing. He pitched five banks on the idea of opening a branch in Cuero. Three accepted; he picked Shiner.

“I’m afraid there’s sometimes a lack of vision in this town,” he told me when I walked into his office.

“Some people complain about the traffic, the crowds at the restaurants. And sure, that’s a problem. But that’s a glass half-empty approach. And me, I’m more a glass half-full kind of guy.

“Life is change,” Kleinecke said. “But it wasn’t, here. At least, not until recently. This oil could really put Cuero on the map.”

The majority of his business is loans for commercial real estate, most of which is fed by the boom. He has given loans for several RV parks.

Kleinecke sees the oil boom as Cuero’s chance to turn into a real vacation destination. He hopes that the infrastructure being built to cater to oil workers can later serve tourists and retirees. Downtown, a collection of single-story red-brick buildings, has more foot traffic than ever. Kleinecke envisions more people visiting a revitalized downtown, with antique stores and art shops. Others will come to tube and kayak on the Guadalupe River, which runs just west of town.

“The Winter Texans used to go to Mexico,” he said, “but the border’s dangerous. What if we could attract them to come here? The climate’s nice, we have a river. It’s centrally located between three major cities. This is a nice place.”

The town has some modest historical significance as a stop on the Chisholm Trail, a major route for livestock headed out of the state in the 19th century. When the Chisholm Trail Heritage Museum opens, Kleinecke hopes, it will attract tourists interested in cowboy history.

As the infrastructure grows, Kleinecke says, Cuero might be able to attract retirees. Maybe the oil workers will want to stay. Kleinecke would like to see developers begin building new homes—Cuero hasn’t had a new subdivision since the 1980s.

Kleinecke agrees with the mayor about the town’s potential. “We get some development here, maybe we can get some nice restaurants,” he said. “I’d like to see Chili’s move in.”

photos by Sandy Carson

“They’re going to bring tourists?” Sister Elizabeth Reibschlager asked me when I told her about my conversations with the mayor and Kleinecke. “What are people going to come look at, oil wells?

“They have their shiny idea of what’s going to happen, and they don’t want to hear anything else.”

Sister Elizabeth, a nun of the Sisters of the Incarnate Word and a Cuero native, has spent the last two years raising concerns about the drilling.

“The trouble with all this drilling, all this money,” said Sister Elizabeth, who is nearing 80, “is that everyone looks at it in terms of the present. Present profit, present lease money. But the fact is, we don’t know how long this boom is going to last. We don’t know what the cost is going to be.”

The unknowns are the problem. No one knows what the drilling is going to do to land values and water supplies; no one knows how long it’s going to last. Until the drilling started, cattle had always been DeWitt County’s most valuable resource. Cuero residents are worried the drilling could put that resource at risk.

In the last five years, significant concerns have been raised about the environmental impact of shale gas drilling. A Duke University study of the Marcellus Shale released in May 2011 found that water wells near frack sites contained 17 times the amount of methane—an odorless, colorless, flammable gas—as wells that weren’t near the sites. In August, The New York Times uncovered a previously sealed 1987 EPA study that found a well in Pennsylvania had been contaminated by an earlier version of fracking. The report suggested there were probably many more cases, but that it would be difficult to determine the number. Claims against oil and gas operators are often settled out of court and bound by non-disclosure agreements.

“This is typical practice, for instance, in Texas,” the report stated. “In some cases, even the records of well-publicized damage incidents are almost entirely unavailable for review.”

Since the report was completed, fracking has spread throughout the country. Since the boom started in earnest in 2003, there have been more and more troubling stories of families in North Texas and Pennsylvania who signed leases with shale gas companies and later found that their water had turned bubbly and foul smelling. Many could actually set their water on fire. Some developed mysterious rashes and neurological ailments.

Fracking fluid is a cocktail of water, corrosive sands, and toxic chemicals that drilling companies use to pulverize the shale layer. The exact ingredients of the fluid are a secret, except to the chemical divisions of the oil companies that produce it. National oil and gas lobbyists got their chemical-laden fracking water exempted from scrutiny under the Clean Water Act of 2005. The Texas Legislature recently passed a law requiring companies to list the ingredients in their fracking fluid but allows them to exclude those compounds deemed “trade secrets.”

The oil and gas industry maintains that fracking does not contaminate wells because the chemicals are injected into sealed wells thousands of feet below aquifers. But fracking wastewater is frequently spilled or disposed of in open tanks where it may end up as runoff, and contaminated drilling mud is often spread on farmland, according to industry sources and critics of the process.

Even if water supplies aren’t contaminated, Cuero residents are concerned that fracking is depleting them. It takes two million gallons of fresh water to frack a single shale gas well. Residents say that water is needed for ranching. Complicating matters, DeWitt County is in the midst of a drought so severe that this year the U.S. Department of Agriculture declared the county a natural disaster area. Aquifer levels have dropped 20 feet in some places.

At feed stores and farm co-ops in the county, the drought—and whether the drilling is making things worse—is a constant topic of conversation among ranchers.

“The short answer is, no one knows,” says Mark Krueger, who runs a private water testing company in nearby Victoria County. “No one’s doing the research.”

In June, the Guadalupe-Blanco River Authority, which manages water resources in the watersheds, invited Texas Railroad Commission Chairman Elizabeth Ames Jones to a meeting to address local fears about water levels and contamination from drilling. Jones, whose agency regulates the oil and gas industry in the state, said residents had “nothing to fear.” It was “geologically impossible,” she emphasized, for fracking to contaminate groundwater.

Whether it has or has not polluted the water, shale drilling has changed the landscape, threatening Cuero and DeWitt County’s quality of life. Cuero sits in a beautiful countryside of green rolling hills with painted red barns. Giant live oaks draped with curtains of Spanish moss hover over little creeks and the banks of the Guadalupe. In the three years before that first well on Charlotte Krause’s property, Cuero’s population increased by 4 percent. According to Tom Batts, a local rancher who serves on the Cuero Development Board, the new residents were mostly retirees from cities, looking for a “small-town quality of life.”

That quality of life is disappearing as the boom intensifies. It takes approximately 200 trips by an 18-wheeler to frack a well. The constant traffic has punished DeWitt County’s roads. The number of cars driving through town increased almost 30 percent between 2009 and 2010, and shows no signs of declining. In the country, the green hills are increasingly covered with wells and petroleum separating stations. The gas companies have to cut down trees to drill wells and build roads to the drill sites.

The mayor and others in Cuero are betting the town’s greatest resources—its land and water—on the chance that oil industry claims are true.

“Oh, I don’t know about that,” Kleinecke said when I asked him about the possibility that drilling could contaminate the region’s water. “Call me naïve, but I’m inclined to trust the industry to be good stewards of this land until they prove me otherwise.”

The gambling term is “betting on the come.” It’s the idea that with a weak hand, you bet on the possibility that you will strengthen your hand on the next draw, allowing you to win. There’s no science behind the bet. This is what the oil companies do when they drill. They don’t quite know what is under the land, how much oil they’ll be able to pull out, or how long the supply will last. The people of Cuero and DeWitt County are also betting on the come.

I asked Charlotte Krause: If Petrohawk came to her today with the offer for that first drilling lease, would she accept it?

She pursed her lips. The drilling’s been good for her family, she said. The money has bought her aging father some comfort in his retirement years. Now he can ranch as a hobby instead of a necessity.

Yet she misses the trees, cut down to allow drilling. And she laments the gravel roads that cut across the verdant fields to the well sites.

Her family used to hunt deer on their land. Last year the deer were gone, probably scared off by the drilling, she says.

She hopes they’ll be back this year. But if the deer don’t return, her family can now afford to take a deer lease on someone else’s land.